2/05/2004 @ 10:00AM

Googling The Midas List

Google
‘s expected $15 billion public offering could kickstart other deals the way Netscape’s IPO did in 1995. But even if Google does not break the dam and flood the markets, the event will still dramatically change our Midas List rankings.

The list ranks venture capitalists based on deals going back to Netscape’s offering. In the late 1990s telecom equipment makers, e-commerce companies and others reached ridiculously high valuations, making VCs and their investors rich. The valuations caused some VCs to move quickly up the Midas List, which weighs the value of every start-up’s exit, whether through a public offering or an acquisition.

Since 2000 the number of venture-backed IPOs has fallen from over 200 a year to just 29 last year. Those few offerings have typically been smaller, rarely achieving more than a $1 billion valuation. In fact, the average IPO valuation last year was $285 million. The recent drought means there has been little mobility on the list.

Google has two venture investors who sit on its board: L. John Doerr of Kleiner Perkins Caufield & Byers, ranked number four on the Midas List, and Michael Moritz of Sequoia Capital, ranked number 32. A Google offering would rocket Doerr to the top of the list, with Moritz not too far behind.

Before Google, Doerr’s most successful IPO was FreeMarkets, which had a first-day market cap of $4 billion in 1999. That company was purchased by
Ariba
last week for $493 million.

After a Google offering, the rest of the Midas List would choke on Doerr’s dust, including current frontrunner Promod Haque of Norwest Venture Partners and second-ranked Vinod Khosla, Doerr’s partner at Kleiner Perkins. Haque and Khosla would need one or two $1 billion deals just to catch up to Moritz, and many more deals to catch Doerr.

To put Google’s size in perspective: If a venture capitalist with no prior exits had the same stake in Google as Doerr or Moritz, he or she would most likely crack the top ten in next year’s ranking.

Start-ups like Motive and Shopping.com may also go public in 2004. Neither would be nearly as big as Google, but they could still improve some venture capitalists’ rankings. Salesforce.com is also expected to go public, but since that company does not have any significant venture backing it will not have a big impact on the Midas List.

But Motive, an e-commerce software maker, should add one name. John Thornton of Austin Ventures is the primary venture capitalist behind Motive, which in December filed papers to go public. The company plans to raise $70 million, but it has not released enough information yet to gauge how the company will be valued.

In any case, the Motive IPO should tip Thornton into the top 100 of the Midas List.

Michael Maples Sr., an angel investor and former
Microsoft
executive, has funded and advised Motive, which was co-founded by his son, Michael Maples Jr. Now ranked number 67, a Motive IPO would probably push Maples Sr. into the top 50.

Shopping Web sites DealTime and Epinions merged last year to form Shopping.com. Both companies had been profitable since 2002, according to a spokesman. The neww company has not yet filed to go public, but the Silicon Valley rumor mill has identified it as a marquee IPO prospect.

The two VCs who would benefit most from a Shopping.com IPO are Bill Gurley with Benchmark Capital and Michael Eisenberg of Israel Seed Partners. Though neither is likely to join the list because of Shopping.com, it could portend a bright future beyond 2005.

And if Google’s expected springtime IPO does inundate the market with deals, the whole Midas List could be turned upside down in one fell swoop.